Banks cut base rates; loans to be cheaper

TIL Desk Business/New Delhi/ Housing, auto and corporate loans are all set to become cheaper with half a dozen PSU and private banks on Monday steeply reducing benchmark lending rate by up to 1.48 per cent after spurt in deposits following demonetisation.

Taking a cue from State Bank of India, other lenders including largest private sector lender ICICI Bank and state-owned Oriental Bank of Commerce and Andhra Bank announced cut in marginal cost of funds based lending rate (MCLR).

SBI on Sunday reduced the lending rate by a good 0.9 per cent after Prime Minister Narendra Modi in his new year eve address urged the banks to focus on the needs of poor and lower middle class and middle class. The reduction in lending rates may prompt increase in credit offtake which has moderated substantially putting burden on balance sheet of banks.

Home loan rate for ICICI Bank will come down between 0.45 and 0.6 per cent depending on quantum and category. Another private sector Kotak Mahindra Bank too reduced the MCLR rate by up to 0.45 per cent. The bank has reduced MCLR by 0.20 per cent to 9 per cent from 9.20 per cent for 1-year tenor, Kotak Mahindra Bank said in a statement.